As the man charged with chipping away at the Defense Department’s ballooning health budget, Air Force Lt. Gen. Douglas Robb gets positively energized discussing the complex challenges facing the new Defense Health Agency that he leads.

The organization, which stood up a little more than 100 days ago, is supposed to make the military health system more efficient by standardizing medical practices and consolidating support services once run by the Army, Navy and Air Force and managing joint facilities in six major military medical regions.

DHA represents a chance, Robb said, to create a better, stronger health care system — one that delivers high quality care for less to 9.7 million troops, family members and retirees.

“Before you ask retirees or anyone to share the burden of rising health costs, you better get your house in order. And that’s what we’re doing, figuring out how we can best deliver care for the best value,” Robb said in a meeting with Military Times reporters and editors.

DHA was organized to take responsibility for common health services supporting operational forces, such as the Tricare health program, pharmacy benefits, information technology, education, training research and facilities planning.

It also was tasked with establishing and managing medical markets in parts of the country with high military populations and numerous military medical facilities. In these areas, medical facilities will be run under one manager leading a joint-service staff.

DHA also is charged with standardizing medical practices and data and outcome measures across the services.

The ultimate intent, Robb said, is to translate the resounding success of the jointly run trauma and medical systems in Iraq and Afghanistan to garrison medicine, at a cost lower than the services going it alone.

Wartime lessons

“All those lessons learned from the wars, the fact that we were working side-by-side ... that ability to come together said, ‘Hey, we can do this back home.’ We are more alike than different, and where can we bring these parallel redundancies together, [we should],” Robb said.

According to its mandate, DHA must save $2.4 billion through 2019 just by consolidating 10 shared services alone.

The agency is making inroads on that job by assuming management of Tricare, pharmacy operations, medical facilities planning, logistics and information technology, and it expects to take over the remaining five — medical education and training, research and development, acquisition and contracting, budgeting and resourcing, and public health — by July.

Each of these shared services is responsible for a portion of the $2.4 billion savings target. Pharmaceutical operations alone is expected to deliver $1.4 billion, or 60 percent, of the total savings, Robb said.

“I haven’t seen so many senior leaders be excited about making that bogey and the reason is they know that in order for us to deliver high quality health care, ... we need to be more efficient and more effective,” he said.

Creation of the new agency, Robb said, was needed to rein in rising health care costs. DoD’s annual health budget appropriations line has risen from $12 billion in 2001 to $32 billion in 2012, comprising 5.9 percent of the department’s personnel budget in 2001 to 9.06 percent in 2012.

Total “health care” spending, which includes military medical personnel costs, has topped $50 billion a year.

Slowing the growth

But also during that time frame, DoD launched several costly changes, including the Tricare for Life program, which provides supplementary coverage for Medicare-eligible retirees.

In the past several years, medical inflation also has slowed and even stabilized, providing some comfort for budget managers. Still, costs must be contained in order to continue providing optimal care and to return dollars to where they are needed most — supporting and treating the warfighters.

“All of us agree we’re not going to take the unified medical budget of $51 billion and turn it into $40 billion,” said Al Middleton, DHA acting deputy director, who accompanied Robb in the interview. “But you can look at what is driving the cost up and put levers in to slow the growth.”

Since 2006, DoD has asked Congress for authority to raise fees for Tricare every year but one. Lawmakers have resisted, however, agreeing only in 2011 to nominal fee increases for retirees based on the annual cost-of-living adjustment to military retirement pay.

The effort to raise fees and a recent initiative to drop 171,000 retirees and family members from Tricare Prime, the Pentagon’s managed care-style program, have raised concerns among beneficiaries that their current benefits will be slashed or eliminated.

Seeking balance

The Pentagon next month will roll out its fiscal 2015 defense budget request and is again likely to ask for increased enrollment or copayment fees for Tricare programs.

Even so, Middleton sought to soothe beneficiaries’ concerns. He said the Pentagon must balance between asking beneficiaries to contribute more and encouraging them to seek care at miltiary treatment facilities, especially in the major market regions where facilities are available and a steady flow of them are needed to maintain military physicians’ skills.

Eliminating Tricare Prime for working-age retirees “is not anything we have proposed. ... It would a be a worry to push this group from medical care because the clinical material would evaporate,” Middleton said.

The major markets, or “multi-service areas,” are Virginia’s Tidewater region; the Washington, D.C. area; Colorado Springs, Colo.; San Antonio; the Puget Sound region in Washington state; and Hawaii.

Those markets make up 45 percent of the beneficiary population at military health facilities, Robb said.

He said that in forging a new path for the military health system, he has looked to the Defense Logistics Agency, established essentially in the 1960s to consolidate the defense supply chain, as a model.

“At the core of our business case analysis is ‘decrease redundancy, increase standardization and have data-driven outcomes.’ At the end of the day, you will provide better value, higher quality care. And if you get that right, it should be at lower cost,” Robb said.■